What You Need to Know About Franchising
Theodore Roosevelt fell in love with North Dakota during his trip to the West in the late 1800s. It was this trip that ultimately inspired him to create some of the first national parks. North Dakota continues to inspire people and small business owners to ‘set up shop’ near the Badlands.
It isn’t all that easy for new franchisors, however. North Dakota is a registration state. In addition to complying with FDD regulations, North Dakota franchisors must also register with the North Dakota Securities Department. In North Dakota, the initial FDD registration fee is $250 and the FDD renewal fee is $100.
North Dakota Franchise Filing Fees
$250
Initial
$100
Renewal*
$0
Pre-Effective Amendment**
$50
Post-Effective Amendment**
*Renewal filings must be submitted before the expiration date or North Dakota may require the filing be resubmitted as a new initial filing with payment of the initial fee.
**Post-Effective Amendment filings must be submitted if you are making a material change to your FDD after your initial or renewal filing is approved. Pre-Effective Amendment filings are submitted if you are making a material change to your FDD but your initial filing or renewal filing is not yet approved. No further sales may be made in North Dakota until the amended FDD is approved and the registration is effectively amended.
Notes
As of October 1, 2021, the required method for filing in North Dakota is through an online portal created by the industry for registration states. The filing fees are also paid through the portal via ACH. You will be required to complete and submit an ACH authorization form to us before we will submit the filing for you. Transaction fees apply for each filing with the current rate being $100 per.
North Dakota will accept unaudited financials in lieu of an audit (in your FDD) from first-year startup franchisors but will automatically impose a financial assurance.
No deals may be closed in North Dakota until the initial, renewal or amendment filing is approved, and all North Dakota prospects must be disclosed/redisclosed with the approved FDD.
Advertising – All advertising to be used in North Dakota or targeted to North Dakota prospects must first be filed with the state at least five business days prior to use. If no rejection of the advertising is received in those five business days, you are free to use the advertising.
Financial Assurance – If the state determines you do not have adequate financial resources available to you to perform your obligations to franchisees, you will be required to institute a form of financial assurance. In most cases, North Dakota will allow your choice of escrow, guarantee of performance, posting of a surety bond or fee deferral.
As of October 1, 2021, the required method for filing in North Dakota is through an online portal created by the industry for registration states. The filing fees are also paid through the portal via ACH. You will be required to complete and submit an ACH authorization form to us before we will submit the filing for you. Transaction fees apply for each filing with the current rate being $100 per.
North Dakota will accept unaudited financials in lieu of an audit (in your FDD) from first-year startup franchisors but will automatically impose a financial assurance.
No deals may be closed in North Dakota until the initial, renewal or amendment filing is approved, and all North Dakota prospects must be disclosed/redisclosed with the approved FDD.
Advertising – All advertising to be used in North Dakota or targeted to North Dakota prospects must first be filed with the state at least five business days prior to use. If no rejection of the advertising is received in those five business days, you are free to use the advertising.
Financial Assurance – If the state determines you do not have adequate financial resources available to you to perform your obligations to franchisees, you will be required to institute a form of financial assurance. In most cases, North Dakota will allow your choice of escrow, guarantee of performance, posting of a surety bond or fee deferral.
In North Dakota, it's illegal to lie down and fall asleep with your shoes on.
Only In Your State
The Dakota Territory used to be one big mass but people from the North and South began to clash over differences in lifestyle, political beliefs, and conflicts with the natives. In 1887, voters approved splitting the territory in two.
The Fact File
Lodging makes up 12.8% of the state's franchises.
IFA
North Dakota Franchise Exemptions
Flat Fee Program for Franchisors
Spadea Lignana’s CORE program for franchisors is a cost-effective and practical solution for the ongoing legal needs of franchisors, including but not limited to, FDD updates, state registrations and franchise agreement executions. Through a proprietary cloud-based system we can effectively and efficiently manage FDD Disclosures and Franchise Agreement executions for fair flat fees billed monthly. We believe that hourly billing, although necessary in certain circumstances like complex M&A deals and litigation, can weigh on the relationship between client and attorney. By coming up with a fair flat monthly fee, the uncomfortable negotiating of whether or not a 6 minute increment in your bill for replying to an email was legitimate goes away.
Attorneys Who Understand ND Franchise Law
Franchise laws vary from state to state, and it can be difficult to understand the requirements. Spadea Lignana has streamlined the process to ensure you remain compliant as you grow nationally.
We also work with franchisors nearby in South Dakota, Montana, and Minnesota.
